Shares in cryptocurrency firms Coinbase Global Inc (NASDAQ:COIN) and Circle jumped after US markets closed on Thursday, lifted by renewed interest in the stablecoin sector and growing expectations of interest rate cuts in the United States.
Circle, which only listed on Nasdaq earlier this month, rose 7.6% after rebounding from a sharp sell-off earlier in the week.
Meanwhile, Coinbase gained 3.9%, adding to a strong monthly performance that has seen its shares surge over 50%.
Coinbase, originally a crypto exchange, now plays a central role in the stablecoin market through its partnership with Circle.
The company distributes USDC, a dollar-pegged digital currency issued by Circle, and earns a share of the interest income generated from USDC reserves, mainly cash and short-term US government bonds.
With Circle’s recent IPO drawing attention to the stablecoin business, investors have started to recognise Coinbase’s position as a key beneficiary of growth in that space.
Market optimism was further supported by expectations that the US Federal Reserve may cut interest rates as early as July.
This move could reduce Circle’s earnings from interest but potentially boost demand for riskier assets like crypto.
Legislative developments around stablecoin regulation in Washington also remain in focus.